DOJ: Biomet Breached Deferred Prosecution Agreement

When Zimmer Holdings, Inc. purchased Biomet, Inc., Zimmer management was well aware that Biomet was under the cloud of a 2012 deferred prosecution agreement (DPA) with U.S. Justice Department to resolve a foreign corruption investigation (FCPA).

The DPA was extended for successive years as prosecutors continued to investigate Biomet’s conduct.

Now that cloud has gotten darker as prosecutors say Biomet has breached the DPA.

Prosecutors filed a status report in Washington, D.C. on June 6, 2016, alleging the breach. The finding could mean that Zimmer Biomet Holdings, Inc., could face criminal prosecution, though the Justice Department said the company had pledged to cooperate and was in “discussions to resolve this matter which would obviate the need for a trial.”

Biomet entered into the 2012 DPA to settle allegations that it paid bribes to state-employed healthcare providers in Argentina, Brazil and China in order to secure business with hospitals. According to the government, Biomet disguised the alleged bribes in its financial reports as “commissions, ” “consulting fees, ” “royalties” and “scientific incentives.”

As part of the DPA, Biomet agreed to pay a $17.3 million criminal penalty, along with a $5.4 million civil settlement to the U.S. Securities and Exchange Commission, and to maintain a compliance program to prevent future misconduct.

According to the DOJ filing, Biomet breached the DPA, “based on conduct in Brazil and Mexico that was disclosed by the company in 2014 and based on Biomet’s failure to implement and maintain a compliance program designed to prevent and detect violations of the FCPA and other anti-corruption laws.”

Jeff Binder, the CEO of Biomet at the time of the alleged bribes is no longer with the company.